Mexico ups benchmark lending rate ¼-point to 7.25 percent

MEXICO CITY (AP) — Mexico's central bank raised its benchmark interest rate a quarter point to 7.25 percent on Thursday to try to rein in inflation that continues to outpace targets.

The Bank of Mexico said in a statement that annual inflation was 6.63 percent in November. It forecast convergence with its 3 percent target to be slower than previously anticipated and said inflation could near that goal around late 2018.

The move came a day after the U.S. Federal Reserve hiked its key interest rate from 1.25 percent to 1.5 percent.

Mexico's economy shrank 0.2 percent in the third quarter amid uncertainty over NAFTA renegotiation talks and natural disasters, including two damaging earthquakes.

The Bank of Mexico said Thursday that there has been some slowdown in manufacturing exports, indicators of private consumption have been less dynamic and investment has weakened.

It said the balance of risks to growth continue to be biased downward, primarily due to NAFTA uncertainty.